HELSINKI (MNI) – Europe must pay closer heed to the structure of
its banks and to their balance sheets, Bank of England Governor Mervyn
King said Friday.
Speaking at the anniversary celebration of the Bank of Finland,
King asserted that “monetary matters are often intricately bound up with
politics.”
“To some extent this is inevitable — what surer way is there of
destroying the existing order than debauching the currency?” he asked.
Europe, King affirmed, “must pay more attention to the structure of
our banks and the state of their balance sheets, not only for financial
stability reasons but also for the conduct of monetary policy.”
Economic theory has inadequately heeded the dependence of monetary
policy transmission on “the details of the behavior of the banking
system,” according to King.
King reminded his listeners in the luncheon address that “we too
are all experiencing a period of monetary and economic turbulence
following the world’s biggest financial crisis. We need to chart our way
out of this crisis and that we can only do together.”
No country is “an economic island,” he said, and “our salvation
must be found in international cooperation.”
–London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com
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